In 2007, the Islamic State of Iraq was seen as “the richest of the insurgency groups” in Iraq with $1 billion to 1.5 billion “collected in revenue by the group through foreign donations, enforced taxation and confiscation of the property and funds of Iraqis.” But the U.S. surge and ISI missteps significantly damaged the jihadist group’s ability to raise funds.
ISIS’s financial recovery has been marked by a slight shift away from reliance on local extortion networks (although those are still in effect), improved organizational and financial management by ISIS leader and self-proclaimed caliph Abu Bakr al-Baghdadi, and the departure of U.S. troops in 2011.
The most important elements of ISIS’s funding are sadaqa (voluntary donations) from Arab donors in the Gulf; sales and tolls collected on sales of oil from fields under its control; and increasingly through money made by controlling key infrastructure.
Here’s a rundown of ISIS’s main funding channels:
Sadaqa from private donors:
- Support from Saudi donors and fighters
- Qatari donors and bundlers (see here, here, and here)
- Kuwaiti fundraisers
- Donors from the United Arab Emirates
- Other donations around the world including Indonesia
Fundraising is aided by contemporary marketing methods:
- Publication of a glossy annual report to attract “investors”
- Increased use of social media to raise funds
- ISIS controls 60 percent of Syrian oil including the lucrative Omar field
- In Iraq, ISIS controls Butmah and Ain Zalah oil fields, the refinery in Baiji, and oil and gas resources in Ajeel in northern Iraq
- ISIS sells or collects a portion on black market sales to Turkey, Iran, and in Syria itself
- Revenue estimates for ISIS range from $1 million to $3 million daily
- In addition to oil, control of key infrastructure such as the dams in Mosul, Fallujah, and Tabqa present increasingly significant revenue potential for ISIS.
- Professor Ariel Ahram notes this is already occurring at Tabqa, where ISIS is involved in selling electricity.
- New York Times reporter Tim Arango says that possession of the Mosul dam can enable ISIS to “use it as a method of finance” through extortion schemes to continue their operations.
- Isis has seized arms from Iraqi depots, including U.S. weapons given to Iraqi forces, plus weapons smuggled from Turkey and Croatia
- The collection of ransom money has sustained ISIS throughout its existence
- Antiquities smuggling
Incidently, little is being done by the Gulf states to curtail the flow of donations to ISIS because they either want an independent Sunni state carved out of Iraq or to replace Iraq’s Shia-led government with Sunnis. Washington should designate Saudi Arabia and Qatar as state sponsors of terrorism, but it won’t because of diplomatic considerations.
Without interdicting the donations and the contraband oil, U.S. airstrikes will have limited effect on ISIS’s coffers.
While she ran the Points of Light Foundation, U.S. Senate candidate Michelle Nunn (D-Ga.), authorized MissionFish, a Points of Light donation processor, to pass contributions from eBay customers to charities of their choice, including Islamic Relief USA (IR-USA). The Nunn campaign refers to this authorization as “validation;” in other words, Points of Light had researched the charity and validated it for inclusion on MissionFish’s list of eligible charities.
The Nunn campaign argues that $33,000 donated by eBay shoppers passed through Points of Light to IR-USA does not constitute a donation by Points of Light to IR-USA. That is disingenuous because what actually happened is that Points of Light received these ear-marked donations and then cut a check themselves to IR-USA. Points of Light benefits from the transaction because it increases the appearance of their overall charitable volume. The eBay customers would not have been able to donate funds to IR-USA while completing their purchases online if MissionFish had excluded the organization on their menu of options.
IR-USA donates millions of dollars each year to Islamic Relief Worldwide, a UK-based organization that has been banned by Israel for aiding Hamas, and whose leadership is linked to the Muslim Brotherhood. A Department of Justice official has implicated IR-USA for being a conduit for the flow of money from America to terrorist groups abroad. Russian intelligence indicates that IR-USA funds militants in the North Caucasus—the region where the family of the Boston marathon bombers originate. Nunn and Points of Light could have discovered several of the red flags about IR-USA, many of which had already cropped up before validation occurred, by conducting due diligence research or even a basic Internet search.
Unfortunately, Points of Light isn’t the first organization to legitimize IR-USA. IR-USA work has been acknowledged by Hillary Clinton’s State Department, the Obamas, the U.S. Department of Agriculture, and it maintains 501(c)(3) status with the IRS.
These politicians and agencies have been willing to overlook questionable practices by IR-USA because of their eagerness to demonstrate cooperation with Muslim Americans and Islamic charitable sector. The embrace of IR-USA was exacerbated by IR-USA’s fraudulent representation of itself as a larger charity than it actually was by hyper-inflating the valuation of their deworming drug stockpiles. Although the value of deworming drugs may sound like a technical, minor point, it is not. IR-USA basically perpetrated a fraud for several years by overstating the value of the drugs which made up 75 percent of their assets. Bigger institutions like USDA and Points of Light are likelier to partner with bigger charities, which IR-USA seemed to be. If IR-USA had reported a truthful value of its donations and assets, it may not have been viewed as a big enough charity to attract institutional partners like these.
A major charitable bundler like Points of Light had the resources to discover the disturbing truths about IR-USA’s connections to Hamas and its fraudulent financial statements prior to validation. It’s time that federal agencies and institutional donors started paying less attention to warm-and-fuzzy statements by politicians about what a great partner a certain charity is, and pay more attention to the results of basic due diligence research. Until then, and until there are changes at the highest levels of the IRS and the Department of Justice, and a willingness to confront IR-USA for its history of misrepresentations, we will probably see decisions like Nunn’s repeated again.
In addition to institutional and charitable support by Qatar, Al Qaeda and its offshoots (including jihadists in Syria and Iraq) receive substantial financial support from private Qatari donors and bundlers. Here’s a quick who’s who:
Abd al-Rahman al-Nuaymi
Abd al-Rahman al-Nuaymi: The U.S. Treasury Department describes al-Nuaymi as “a Qatar-based terrorist financier and facilitator who has provided money and material support and conveyed communications to al-Qa'ida and its affiliates in Syria, Iraq, Somalia and Yemen for more than a decade. He was considered among the most prominent Qatar-based supporters of Iraqi Sunni extremists.” Al-Nuaymi transferred $600K to Al Qaeda in Syria in 2013, and sent $2 million monthly to Al Qaeda in Iraq for an undisclosed period of time. He is also described as an interlocutor between Qatari nationals and Al Qaeda in Iraq leaders.
Salim Hasan Khalifa Rashid al-Kuwari: Treasury says al-Kuwari “provides financial and logistical support to al-Qa’ida, primarily through al-Qa’ida facilitators in Iran. Based in Qatar, Kuwari has provided hundreds of thousands of dollars in financial support to al-Qa’ida and has provided funding for al-Qa’ida operations, as well as to secure the release of al-Qa’ida detainees in Iran and elsewhere.”
Abdallah Ghanim Mafuz Muslim al-Khawar: According to U.S. officials, “Al-Khawar has worked with Kuwari to deliver money, messages and other material support to al-Qa’ida elements in Iran. Like Kuwari, Khawar is based in Qatar and has helped to facilitate travel for extremists interested in traveling to Afghanistan for jihad.
Khalifa Muhammad Turki al-Subaiy: The UN describes al-Subaiy as “a Qatar-based terrorist financier and facilitator who has provided financial support to, and acted on behalf of, the senior leadership of Al-Qaida (QE.A.4.01). He provided assistance to senior Al-Qaida leader Khalid Sheikh Mohammed prior to Sheikh Mohammed’s capture in March 2003. Since that time, he has provided financial support to Al-Qaida senior leadership in South Asia.” Al-Subaiy served a brief prison sentence in 2008 before being released by Qatar.
Yusuf Qaradawi: The Egyptian-born, Qatar-based spiritual father of the international Muslim Brotherhood sits atop a massive terrorist funding network including the “Union of Good” umbrella network of charities that funds Hamas. Qaradawi was also a sharia adviser for Al Taqwa which provided banking services to Al Qaeda.
In an attempt to clip Pakistan’s terror charity Jamaat ud Dawa’s (JuD) financial wings further, the U.S. Department of the Treasury on 25 June (2014) has once again targeted the leadership and financial networks of the organization. The JuD (formerly Markaz Dawat-ul-Irshad-MDI) which is a social charily front for the deadly Jihad group Lashkar-e-Taiba (LeT) has been operating with impunity inside Pakistan since its inception. The group was founded by Hafiz Muhammad Saeed, the present chief of JuD and all its franchises and Zafar Iqbal in Afghanistan’s Kunar province in 1987 under the active guidance of Abdullah Azzam, the Palestinian Islamic ideologue who mentored Osama bin Laden. LeT has its headquarters in Muridke (Moreedkey) town, located near Lahore, Pakistan and operates training camps in Pakistan administered Kashmir and some parts of Punjab province and presently expanded into Sind and Balochistan provinces of Pakistan and Bordering areas of neighboring Afghanistan.
LeT has perpetrated numerous terrorist attacks against India including the November 2008 Mumbai serial attacks. The group aims to establish Nizam-e-Mustafa (God’s government) in the world and merger of Muslim majority Jammu & Kashmir (J&K) state with Pakistan. It has called for holy war against the United States, India and Israel. With active support from Pakistan’s external intelligence agency ISI, the Lashkar-e Taiba furthers its anti India objectives introducing suicide missions in Jammu and Kashmir and into the heartlands of India over the years. The JuD/LeT combine often compared with the al Qaeda for its lethality and sometimes with Hezbollah and Hamas, for its militancy-cum-charity activities. Most recently Jamaat Ud Dawa morphed into a political pressure group in Pakistan.
With active and sustained State patronage and to become legitimate in the eyes of international community, Hafiz Saeed and his cohorts have branched out to charitable works during natural calamities. Religious activism remains its focal point. The JuD/ LeT runs many Islamic centers, schools and religious seminaries, a network of hospitals, orphanages, charity centers along with thousands of administrative and fund collection centers across Pakistan. After a brief government crackdown under international pressure, the JuD has reorganized itself under many umbrella conglomerates e.g. the Tehrik-e-Hurmat-e-Rasool (THR-Movement for Defending the Honor of the Prophet), Tehrik-e-Tahafuz Qibla Awal (TTQA) and Al-Anfal Trust. To evade government proscription and international scrutiny, JuD established many charity fronts e.g. Idara Khidmat-e-Khalq (IKK) and Falah-e-Insaniyat Foundation (FIF). Rightly observed that Lashkar e Taiba /JuD combine has successfully blended militancy with charity works in Pakistan and neighborhoods (e.g. Maldives/Lanka) through many shadow originations to dodge crackdown and international scrutiny.
So far, US Treasury and the Department of State have designated 22 individuals and four entities associated with Lashkar-e Taiba and JuD.
The US government for the first time included LeT in the Terrorist Exclusion List on December 5, 2001 and designated as a FTO (Foreign Terrorist Organization) on December 26, 2001. In April 2006, The US State Department added Jamaat-ud-Dawa (JUD) and IKK as aliases of Lashkar- e- Taiba under the executive order 13224, which blocked all property, and interests in property of JUD and IKK that are in the United States, or come within the United States, or the under the control of U.S. persons. In May 2008, the US state department has imposed sanctions (including freezing of assets) of four senior ideologues and financier of JuD/LeT including of Hafiz Saeed, Zaki-ur-Rehman Lakhvi, Haji Muhammad Ashraf and Mahmoud Ahmed Bahaziq. In November 2010, the US designated Falah-e-Insaniyat Foundation and couple of leaders associated with the foundation, Hafiz Abdur Rauf, Mian Abdullah and Mohammad Naushad Alam Khan, to its list of specially designated global terrorists (SDGT).
Again on September 2011, the U.S. Treasury designated two more LeT/JuD leaders, Zafar Iqbal and Hafiz Abdul Salam Bhuttavi.
In Late August 2012, the US Treasury designated another eight LeT/JuD leaders including Abdullah Muntazir, Ahmed Yaqub, Sajid Mir, Hafiz Khalid Walid, Qari Muhammad Yaqoob Sheikh and Talha Saeed.
On June 25 (2014) the department again designated Nazir Ahmad Chaudhry and Muhammad Hussein Gill as Specially Designated Global Terrorists.
LeT is listed as banned organization in India, Pakistan, US, Canada, the United Kingdom, the European Union, Russia and Australia. The United Nations Security Council has already imposed sanctions on Jamaat-ud-Dawa and has declared it as a front group for the LeT. Despite the Pakistan government’s proscription, Jamaat-ud-Dawa (JuD) has stepped up its overt anti-Indian and anti-Western rhetoric and operates freely holding mass rallies across Pakistan as its leaders continue to give provocative speeches in various public forums to fuel Jihadi sentiments and threaten Indian and Western interests in the region.
How far these restrictions will hamper JuD/LeT’s operations would remain to see. There would be very minimal impact inside Pakistan as the group uses various informal channels to raise funds and it runs under State patronage. It raises funds during public gatherings in Pakistan mostly from wealthy individuals and inspired people for the cause of Kashmir and Islam. The latest sanctions and designations would delegitimize the causes. Even though US impositions of such financial actions will not make much difference immediately to JuD or its various franchises inside Pakistan, it will certainly make things difficult for them in the long run to operate at the international sphere raising funds and logistics through formal channels, especially the donations come in the name of humanitarian and educational charity. Also, large amount of donations from the Pakistani Diaspora overseas would be restricted. And last but not the least the restrictions will jeopardize their movement (Travel) aboard especially in the Middle Eastern countries, considered a hub for Islamic charities.
[Animesh Roul, Executive Direcctor, Society for the Study of Peace and Conflict, New Delhi.]
- Treasury Targets Financial Network of Pakistan-Based Terrorist Organization Lashkar-E Tayyiba, (11/24/2010), http://www.treasury.gov/press-center/press-releases/Pages/tg980.aspx.
- Treasury Sanctions Lashkar-e Tayyiba Leaders and Founders (9/28/2011), http://www.treasury.gov/press-center/press-releases/Pages/tg1313.aspx.
- Treasury Sanctions Two Senior Lashkar-E-Tayyiba Network Leaders (6/25/2014), http://www.treasury.gov/press-center/press-releases/pages/jl2440.aspx
- Treasury Designates Lashkar-E Tayyiba Leadership (8/30/2012), http://www.treasury.gov/press-center/press-releases/Pages/tg1694.aspx
Criminal and terrorist groups are highly interconnected according to new analysis of data by West Point’s Combating Terrorism Center. The conventional wisdom was that criminals worry that working with terrorists may draw unwanted scrutiny from their governments, and they are only inclined to cooperate only in resource-poor environments where it is necessary to survive. But the CTC finds that transnational traffickers and criminals appear to be more than willing to partner with terrorists, and that they benefit from these relationships in a wide variety of environments.
The full report can be read here. It is very thorough (89 pages) and includes academic language and models. Here are a just a few of the salient points from the study about members of the global underworld that may be of interest to practitioners and analysts outside of academia:
- Interconnected: 98 percent of the individuals in the global illicit marketplace are within two degrees of separation of each other.
- International: One in three individuals in the network have international relationships.
- Distributed power: Unlike typical hub-and-spoke networks where 80 percent of the connections rely on 20 percent of the actors involved, the global illicit network is somewhat less dependent on a small number of powerful actors/kingpins. Twenty percent of participants are responsible for only 65 percent of underworld connections. This diffuse hub-and-spoke model makes the network tougher for law enforcement to disrupt.
- Willingness to work with terrorists: “Individuals involved in other illicit activities link to terrorists 35 percent of the time” (p. 43). Terrorists often serve as “boundary spanners,” that link and form introductions between disparate groups such as drug traffickers, arms dealers, and organized crime.
- Frequent bilateral links with the United Arab Emirates: The top two bilateral connections in the criminal underworld--the U.S. and Colombia and the U.S. and Mexico--are probably unsurprising to Americans. The third most prevalent bilateral connections are between India and the U.A.E., and the sixth most common are between Pakistan and the U.A.E.
- Organized crime, not just terrorism, benefits from state sponsorship. We know that state sponsorship of terrorism exists, but for some reason we erroneously assume that state sponsorship of crime does not. The evidence from North Korea, Russia, the Balkans, and Pakistan indicates that criminals can carry out national interests—a phenomenon deserving further study.
- Convergence is not driven by poverty. Terrorists and criminals are drawn together in a variety of environments, not just in countries where there are little money or resources. The evidence indicates that the opposite is often true—that criminal masterminds prefer climates where there is some level of predictability and economic development, such as Monzer al-Kassar operating in Spain and Dawood Ibrahim in Dubai. Focusing only on failed states could be a red herring.
Acknowledgment: Thanks to Twitter user @El_Grillo1 for sending in a link to the CTC study.
Terror finance trials over the last ten years have frequently involved transfers by individuals of a few thousand dollars to terrorist organizations abroad. Sometimes those cases get as much attention from the news media and law enforcement as multi-million dollar cases of funding terrorism.
This tendency is unfortunate because it causes us to lose sight of the big time patrons of terrorism and their methods. Small transfers are likelier to involve individual actors, small groups, and criminal activity. High-dollar terrorist transactions are likelier to involve state sponsorship, or at least large organizations such as major charities, and sometimes corporations which are targeted for extortion or kidnapping-for-ransom schemes by militants. Consider:
• France paid $15 to $20 million to the Taliban for the 2011 release of reporters Stéphane Taponier and Hervé Ghesquière. France may have also paid a $34 million ransom to Al Qaeda in North Africa for the release of four captives last year, and an $18 million ransom just last week to release four journalists abducted by Syrian rebels.
• The Holy Land Foundation, largest Islamic “charity” in the U.S. in the early 2000s, gave $12.4 million to Hamas. George W. Bush said that the money HLF raised was “used by Hamas to recruit suicide bombers and support their families.” The leaders of HLF were found guilty of providing material support to terrorism and received sentences ranging from 15 to 65 years in federal prison.
• Qatar has spent an estimated $3 billion (or, less credibly, $5 billion) to fund Al Qaeda-linked rebels in Syria. In so doing they’ve helped turn Syria into a charnel house with over 150,000 dead since 2011.
• Carlos the Jackal received, according to different accounts, either $20 million or $50 million from the Saudi government in 1975 to release the OPEC ministers he had taken hostage. Allegedly, this money wasn’t used by Carlos himself but was pumped back toward international terrorist causes. Eventually, Carlos the Jackal was caught and sentenced to life in prison in France on separate charges.
• The Born brother heirs to the multinational Bunge and Born corporation were forced to pay a $60 million ransom to leftwing Montoneros terrorists in Argentina in 1974. Some of the money may have been kept in shadowy Argentine and Cuban banks. Mario Firmenich, mastermind of the plot, was convicted in 1987.
• The Palestinian Authority just pledged another $74 million to spend as incentives and stipends for terrorist “martyrs” and their families from their annual budget.
Several lessons should be learned from the above sampling of terrorist jackpots:
1. Don’t pay ransoms. Paying ransoms is the quickest way to fund millions of dollars worth of future terrorist attacks and to increase the likelihood of larger ransom demands down the road.
2. In cases of suspected terrorist financing, always look at both the source and the beneficiary of the funding—not just one party in isolation. With the Holy Land Foundation, we tend to focus mostly on HLF as a contributor, without examining how Hamas uses Islamic charities in the West to finance its operations. Likewise in the Taponier and Ghesquière case, what little coverage there was in English language media focused on the ransom negotiations and French foreign policy, while completely ignoring the aftermath of what the Taliban and the Baryal Qari group did with the money. We learn more from each case when we look at both sides of the equation.
3. Recognize the magnitude of the money involved in these cases. Recall that Al Qaeda’s budget before 9/11 was about $30 million and carrying out the 9/11 attack cost about a half-million in direct expenses. A ransom payment of “just” $15 million is an enormous sum to terrorist groups who can use it for training, recruitment, arms, websites, bribes, fake identity documents, travel, explosives, and wages for dozens if not hundreds of operatives for a year.
4. Identify state sponsors. It is gratifying that several of these big-timers like the Holy Land Foundation and Carlos the Jackal were brought to justice. But notice that when a national government is the sponsor of the activity, no criminal prosecution takes place. The nations involved aren’t even fined like banks would be for committing similar violations. Rather, these cases are handled rather through diplomatic back channels. France has never been held accountable for violating international agreements against the payment of ransoms to terrorists. Qatar has yet to be designated a state sponsor of terrorism despite ample evidence that it is. Sometimes it seems like those with the deepest pockets and links to the terrorist underworld—groups like Islamic Relief, men like Dawood Ibrahim, banks like Al-Rajhi, and spy agencies like the ISI—have escaped the same level of scrutiny that smaller fish receive.
5. Keep probing. The news media is naturally focused on “news.” Their inclination is to stop reporting on stories like these after the financing has been revealed, stopped, or somebody has been convicted. But there is still a great deal of reporting that could be done on each of these major plots. For example, after the Bush administration took on the Holy Land Foundation, their plan was to continue prosecution of related entities and front charities, but the Obama administration put those investigations to a halt (which allowed Islamic Relief USA to continue operating). And there is still a great deal of confusion and conflicting accounts about exactly why Carlos the Jackal accepted the OPEC ransom payment rather than killing Saudi official Sheikh Zaki Yamani, which Carlos was supposedly under orders from Wadi Haddad to do.
6. Don’t underestimate Islamist motives. The temptation in the West is to ascribe the same motives to terrorists that tempt us in our own culture and in secular societies: money and power. But in several of these high-dollar cases, the donors received no tangible benefits from their gifts, and the recipients used the money to further a larger cause—neither for private financial gain nor for raw political power. Keep in mind that demands for ransom to release infidels are permitted under the Qur’an (47:4). Islamic law also mandates that a portion of zakat be given to holy warriors (Q9:60). The transfer of funds to Hamas offered little private gain for the leaders of the Holy Land Foundation, but the leaders did it anyway in keeping with the principles of zakat. An assumption that these transactions are “purely business” is a culturally biased assumption.
By David Nordell
The extremist Islamist terror group Boko Haram has become the scourge of Nigeria over the last five or so years, responsible for more than 1,000 deaths. The close to 300 schoolgirls recently kidnapped by the group are still unlocated somewhere in the Nigerian jungle, apparently waiting to be sold as sex slaves. Most recently, Boko Haram is apparently responsible for an attack on a Chinese work site in northern Cameroon that took place on 16th May, killing one and kidnapping 10.
The world is at least making efforts, symbolic or otherwise, to support the Nigerian government in its fight against Boko Haram. British, US and Israeli counter-terrorist units are reported to be helping in the search for the missing schoolgirls; and West African leaders met in Paris on 17th May, together with Western officials, to work out a plan to share intelligence and coordinate military action. Reuters also reported that Nigeria was to ask for Boko Haram to be placed on the UN list of sanctioned terrorist organisations and individuals.
As far as preventing the financing of terrorism is concerned, most of the value of these lists, whether provided by the UN or national governments, is in the Know Your Customer processes carried out at financial institutions, aimed at preventing suspect individuals and entities from opening bank accounts that might then be used to channel money towards terror activities. And the disappointing truth is that these processes are not very effective, not least because the black lists are usually publicly available, not least to the suspects themselves: suspect individuals can easily change their names and obtain new identification papers; suspect corporate entities can often change their identities even more easily; and in any case accounts can be opened and manipulated through front men.
But perhaps more important than the overall weakness of the anti-money laundering/counter-terror financing regime is the fact that it is almost entirely bypassed by the most common form of cyber fraud, generically known as ’Nigerian fraud’ or ’419 fraud,’ after the section in the Nigerian criminal code that refers to it. As is well known, most e-mail account users around the world receive occasional (or in my case, almost daily) messages claiming to be from some bank manager, or government official, or orphaned child of some national leader, offering a large cut in exchange for help in laundering a multi-million dollar sum that has been misplaced in corporate accounts, or allocated by the UN, or left for charitable purposes. And once the gullible victim starts corresponding with the fraudster, he or she discovers that there are all sorts of expenses that need to be covered before the big money can be released, almost invariably by making payment through one of the major remittance companies such as MoneyGram. The more imaginative frauds tend to use romance as the hook: a good friend of mine lost many tens of thousands of dollars to someone who started an on-line relationship with her through a dating site and then claimed to need money urgently because he had been imprisoned on false charges in Ghana.
Nigerian frauds are of course not confined to Nigeria. But sources with whom I have spoken say that there is already clear evidence that Boko Haram is now one of the key organised groups behind these frauds, and that a good part of the money that is sent by the fraudters’ victims to Nigeria is actually being used to buy weapons and other supplies for its terror attacks, whether in Nigeria itself or in neighbouring countries.
For the time being there do not appear to be reliable figures for the extent of Boko Haram’s involvement in the many thousands of successful 419 frauds, any more than there are reliable figures for the overall extent of these frauds globally: most of the victims are too embarrassed to complain to the police. Similarly, the overall volume of transactions carried out by Western Union, MoneyGram, other smaller remittance companies and now also mobile-phone payments companies is a totally unreliable indicator of how much may end up being taken by Boko Haram, or indeed similar terror groups in countries such as Somalia and the Philippines.
What is clear, however, is that the current KYC regulations that apply to people sending money through the various payments companies are basically irrelevant to this problem of fraud financing terrorism: the victims have no idea where their money is ending up. The same applies to all the many instances of money being stolen from financial institutions and their customers through the better-publicised forms of cyber theft, those that typically use malware infiltrated into customers’ computers and mobile phones. The only real solution is to turn the KYC rules on their head and to insist that those receiving remittances, and counterparties to transfers originating from banks and credit card accounts, be identified by means of secure and authenticated electronic ID (since paper-based or even plastic ID documents are so easy to forge and steal).
Is this likely to happen any time soon? Unfortunately not: although the Financial Action Task Force has recognised the risks behind new payment methods such as internet and mobile payments, as well as Internet-related fraud, this recognition has yet to turn into actual regulatory requirements on the one hand, and secure, scalable technological solutions on the other; and there doesn’t seem to be much of a sense of urgency. To be fair, cyber crime is by no means the only means of financing terrorist organisations such as Boko Haram; but how many more innocent victims will continue to be murdered, maimed and kidnapped because practical solutions are not yet available?